The Central Energy Fund's mid-month statistics indicates that diesel and gasoline car owners will face significant fuel price increases in June.
According to the research, which represents a snapshot of market conditions as of 13 May 2022, petrol prices could rise by as much as R1.98 per litre in May, while diesel prices are under-recovering by between R1.60 and R1.63.
The following is a mid-month snapshot:
Under-recovery/increase of 198 cents per litre for petrol 95; under-recovery/increase of 193 cents per litre for petrol 93; under-recovery/increase of 163 cents per litre for diesel 0.05 percent; under-recovery/increase of 160 cents per litre for diesel 0.005 percent;
Under-recovery/increase of 215 cents per litre for Illuminating Paraffin.
The Department of Energy has stated that the daily snapshots are not predictive and do not account for other potential changes such as slate levy adjustments or retail margin changes, which are established at the end of each month when all variables are considered.
The Department of Energy makes changes after reviewing the entire time. Furthermore, the picture can alter dramatically before the conclusion of the month. The costs in the under-recoveries do not include the government's fuel price interventions, which began in April 2022 and are set to expire at the end of the month.
This means that motorists may notice an R1.50 per litre increase in the general fuel levy. This might result in an R3.48 increase in petrol, though this is subject to change based on any government statements made between now and the end of the month.
The rand/dollar exchange rate and fluctuations in international petroleum product costs, which are mostly determined by oil prices, have an impact on fuel prices.
Rate of change
Weak economic data from China is driving both the local rand/dollar exchange rate and global oil price fluctuations. Covid lockdowns damaged China's industrial output and consumer spending to their lowest levels since the pandemic began. Markets are nonetheless concerned about the possibility of an economic slump due to price pressures and rising borrowing costs.
According to Citadel Global, the outlook for China weighed down overall market sentiment, putting pressure on developing market currencies. Markets are also expecting a rate hike of 25 to 50 basis points from the SARB's Monetary Policy Committee later this week.
The rand has surged beyond R16 to the dollar in May after spending most of April below R15 to the dollar, contributing R1.00 to R1.10 to the under-recovery in fuel prices.
Price of oil
Meanwhile, oil prices have been dragged down by the Chinese data, but are still hovering around $110 a barrel, which is the same level as at the end of April.
While these costs have remained largely consistent, they remain extraordinarily expensive, with international product prices reflecting the ongoing conflict in Ukraine. Local gasoline price under-recoveries are close to another R1 as a result of these recurrent price concerns.
Annalena Baerbock, Germany's foreign minister, said she expects the European Union to implement sanctions on Russian oil in the next days, putting more downward pressure on Brent Crude prices.
At the pump, the price adjustments would look like this:
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